CRA comments on the TOSI excluded share and excluded amount exclusions

2018-0744031C6 indicated that the shares of a corporation that did not generate business income (e.g., a corporation that generated rents that, given the level of activity, constituted income from property) cannot qualify as excluded shares, whereas in Examples 8 and 12 of the December 2017 CRA website Guidance, shares of a corporation earning income from passive investment assets qualified as excluded shares. How should these positions be reconciled?

CRA noted that if in the above example the corporation carried on a business, its shares could qualify as excluded shares. On the other hand, even if it did carry on a business, the amount received from the corporation by the specified individual would qualify as an excluded amount if it were not derived, directly or indirectly, from a related business in respect of the individual for the year.

This response is similar to 2018 APFF Financial Strategies and Instruments Roundtable, Q.2 and 2018 APFF Roundtable, Q.9(a).

Neal Armstrong. Summaries of 27 November 2018 CTF Roundtable, Q.10 under s. 120.4(1) - excluded share.